Sales And Distribution

Module One

Sales and Distribution

Session Objectives Nature and importance of sales management Sales person to sales manager  Emerging trends in sales management  Role of distribution management  Overview of distribution channel members  Linking sales and distribution  

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What is Personal Selling?

Involves two-way personal communication between salespeople and individual customers whether: face to face, by telephone, through video conferencing, or by other means. 3

The Role of the Sales Force Represent the Company to Customers to Produce Company Profit Sales Force Serves as a Critical Link Between a Company and its Customers Since They: Represent Customers to the Company to Produce Customer Satisfaction

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Types of Selling

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THE SELLING FUNCTION

Sales Maintenance

ORDER TAKERS

INSIDE ORDER TAKERS

DELIVERY SALES PEOPLE

Sales Support

OUTSIDE ORDER TAKERS

Sales development

ORDER CREATORS

MISSIONARY SALES PEOPLE

INDUSTRIAL

CHANNELS

ORDER GETTERS

FRONT LINE

NEW BUSINESSES

SALES SUPPORT

TECHNICAL MERCHAND SUPPORT ISERS 5

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The complexity and difficulty of sales job categories increase as they move left to right.

Order Takers

Order Getters

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Sales jobs differ from other jobs because salespeople…

Implement a firm’s marketing strategies in the field. Are revenue generators Are authorized to spend company funds in travel, communication and entertainment. Represent their company to customers and to society in general. Represent the customer to their companies. Operate with little or no direct supervision and require a high degree of motivation. 7

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Sales jobs differ from other jobs because salespeople…

Have a higher level of social intelligence and tact Have to develop innovative solutions to difficult problems. Face role ambiguity, role conflict, and role stress. Face more failures than successes Require considerable travel and time away from home Have to bear pressure from all fronts 8

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Knowledge Updating Habits of Successful Salespeople Finding the right customers Listening to customers’ customers Cultivating resources in their own organizations Keeping an eye on bottom lines Anticipating problems Adopting a long-term view Reviewing each sales call after-the-fact

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Traits of Successful Salespeople Ambitious Analytical Disciplined Drive/Enthusiasm Good communicator Empathy Ethical/Integrity Hard working

Initiative Killer Instinct Persistent/Persuasive Personal Charisma Relationship Oriented Resilience Self confidence Team Players

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Selling Success Factors

1. 2. 3. 4. 5. 6. 7.

Listening skills Follow-up skills Ability to adapt sales style to situation Tenacity Well organized Verbal communication skills Able to interact with people at all levels of an organization 8. Ability to overcome objections 9. Closing skills 10.Personal planning and time management skills 11

A Day in a Sales Manager’s Life Von Oliver is currently national sales manager for a division of Lockheed Martin Corp. Von’s typical day starts at 7:30 A.M. going through e-mail and prioritizing the days events. During the morning he will review reports, and spend time with his sales reps. He will have lunch with customers and spend the afternoon making sales calls with his sales reps. He spends late afternoon reconciling the days activities and setting his agenda for the next day.

Action

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A Day in a Sales Manager’s Life

Result Von Oliver is involved in a variety of different activities. He spends much of his time interacting with individuals, especially salespeople and customers. But, he also plans strategies and continuously monitors performance. In other words, he performs all the major sales management functions.

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The Marketing Concept 

Production Era – up to 1970  Focus on mass-producing a limited variety of

products for as little cost as possible. 

Consultative Selling Era (70s)  Age of the hard-sell.



Strategic Selling Era (80s)  The marketing concept first emerges.



Partnering Era (Mid 90s to Present)  The buyer and seller commit to doing business

over a long time

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Sales Management in the 21st Century

Behavioural – Rising customer expectation, globalisation, demassification of markets  Technological – sales force automation, sales offices, electronic channels  Managerial – Shift to Direct Marketing, outsourcing of sales and merging of sales and marketing 

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Sales Force Management Challenges in the 21st Century

Customer relationship management (CRM) Sales force diversity  Electronic communication systems and computer-based technology  Selling teams  Necessary skills to sell intangibles  Complex channels of distribution  An international perspective  Ethical behavior and social responsibility  

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Sales Management in the 21st Century Creating more nimble and adaptable sales organizational structures  Removing functional barriers within the organization to create greater job ownership and commitment from salespeople  Integrating salesperson performance evaluation to incorporate all activities and outcomes 

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Sales Management in the 21st Century 

Small business is where the business is  

IBM changing its focus to organisations with 100 to 1000 employees HP Small Office Initiative

Smaller companies purchase with a higher speed and frequency  Prefer to research products online  Want to be partnered not entertained  Simple in their approach  Prefer a single point of contact  No more cold calls 

Source: Jennifer Gilbert, “Small but Mighty” Sales and Marketing Jan 2004

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The Internet has allowed many companies to shift sales support for small accounts to e-commerce sites and away from sales personnel. Additionally, many regularly occurring functions have become automated, allowing customers with any size organization to use web-based systems to place orders and submit warranty requests. Can you think of any other areas where Internet-based technologies could change the way a sales force interacts with their customers? 48

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Help on the Net Percentage of Companies Using the Internet for Sales Activities

100%

Prospecting

Order Entry

0%

Expense Reports

20%

Competitive Reporting

40%

Proposal Development

60%

Product Explanation

80%

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Source: “G-BB,” Sales and Marketing Management, June 2000, pp. 64&65.

Sales Management The planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force American Marketing Association

The management of the personal selling component of an organisation’s marketing programme

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Sales Force Management Designing Salesforce Strategy and Structure Recruiting and Selecting Salespeople Training Salespeople Compensating Salespeople Leading and Motivating Salespeople Evaluating Salespeople

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The Nature of Sales Management 

Has evolved from recruitment , training, supervising and motivating the sales force to also include :  Strategic Planning  Forecasting  Budgeting  Territory Planning  Sales Cost Analysis



He has to have the ability to select the right person and keep him motivated through the highs and the lows

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Roles and Skills of a Sales Manager No longer the driver but the support From boss to leader  Detailed understanding of the customer  Partnering the sales reps  Flexibility to deal with hybrid sales force of reps, telemarketing, MSRs  Seeking ways to exceed customer expectations  Better at people skills than at analytical or evaluative skills  

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Sales Management Trends

Transactions

Relationships

Individuals

Teams

Sales Volume

Sales Productivity

Management

Leadership

Local

Global 25

TRANSACTION TO RELATIONSHIP

Transaction Oriented     

Get new accounts Get the order Cut the price Short term Sell to anyone

Relationship oriented     

Retain existing accounts The preferred supplier Price for profit Long term profit Concentrate on high profit potential accounts

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Effective Sales Managers:

Utilize a Strategic Perspective Focused on Customers Attract, Keep, and Develop Sales Talent Leverage Technology

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Selling and Managing Activity

Sales rep

Sales Manager

Primary responsibility

Develop accounts

Develop people

Working relationships

Alone

Through others

Role

Player

Coach

Part of Management

No

Yes

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Designations Front Line

Middle

Senior

Sales Rep

Area Manager

Branch Manager

Area Executive

Major Account Manager

Regional Manager

Medical Rep

District Manager

Zonal Manger

Territory Manager

Unit Sales Manager

General Manager

Officer

Supervisor

Vice President

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Sales Personnel Career Path Senior/Top Level

Middle Level

Front Line 30

Importance of Personal Selling and Sales Management 

In our Economy

 Buyers’ market from mid 70s. The problem

has shifted

from production to selling  Production and sales are seen as the two pillars with all other areas supporting these functions



In an individual organisation

 All marketing plans go awry if not implemented by the

sales force  Biggest expense post manufacturing



To you, the students

 The line which you will join and stay with for at least

another five years

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The best executive is the one who has enough sense to pick good people to do what he wants done and self-restraint enough to keep from meddling with them while they do it. Theodore Roosevelt

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Module One

Sales and Distribution

The Need for Marketing Channels Manufacturers lack the financial resources to carry out direct sales both in terms of inventory and selling costs  Practically not feasible especially for low value high volume products  Returns on manufacturing higher than returns on retail 

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What is a Marketing Channel?  A set of interdependent organisations

involved in the process of making a product or service available for consumption or use  Intermediaries  create and meet demand  Facilitate smooth flow of goods and funds

between manufacturers and consumers

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Major Role of an Intermediary

Place Utility

Time Utility

Possession Utility A customer wants to buy a tube of toothpaste at 8 pm on a Tuesday evening

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What is a Marketing Channel? A set of interdependent organisations involved in the process of making a product or service available for consumption or use  They are the intermediaries who 

 Create and meet demand  Facilitate smooth flow of goods and funds

between manufacturers and consumers  Are the agents of delivery for manufacturers who concentrate on production and brand building

What is a Marketing Channel? 

Examples:  Computers

from direct sales to VARs to retailers

to Internet  Books authors, publishers, wholesalers, retailers to the net. Impact for logistics  Pharmaceuticals involving hospitals, doctors, wholesalers, distributors. Identification of key players on scanning the changing environment

Why are there Marketing Channels? 

Demand Side factors  Facilitation of Search both for the manufacturer

and the end user 

Example – Bond paper vs. fancy stationery

 Adjustment of Assortment Discrepancy  Sorting - case of fruits, grading  Accumulation – from various suppliers, variety  Allocation – breaking bulk  Assorting – breakfast table

Consumer Marketing Levels

Two Levels

Distributors

Wholesalers

Retailers

Retailers

Three Levels

One Level

Zero Level

M A N U F A C T U R E R S

Wholesalers

Retailers

C O N S U M E R S 40

Industrial Marketing Levels

Industrial Distributors

Sales Branches

Two Levels

One Level

Zero Level

M A N U F A C T U R E R S

Industrial Distributors

C O N S U M E R S 40 41

Cost Value Relationships

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Distribution Modes 

Choice of combination and contribution of each set is determined by:  Nature of products  Nature and dispersal of customers  Market expectations of credit  Company’s capabilities and strengths  Desired speed of market penetration  Competitive forces

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Functions of Marketing Channels



Demand Side factors  Facilitation of Search both for the manufacturer

and the end user 

Example – Bond paper vs. fancy stationery

 Adjustment of Assortment Discrepancy  Sorting heterogeneous supply into relatively homogeneous sets – grading  Accumulation – from various suppliers, variety  Allocation – breaking bulk  Assorting for resale in association with each other – breakfast table

Functions of Marketing Channels 

Routinisation of transactions  Each purchase transaction involves ordering,

valuating and paying for goods/services  Routinisation of these transactions lead to higher efficiencies and standardisation of goods  Electronic Data Interchange  Continuous Replenishment Programmes

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Functions of Marketing Channels

 



Reduction in Number of Contacts by Manufacturers Manufacturer also wants to take advantage of bulk packs to reduce transaction and distribution costs Lot sizes, frequency of delivery, payments and communications routinised through channels

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Reduction in Number of Contacts 

Quality of Contacts at different levels is different  Company sales force vs. Wholesaler sales force

 

All retailers may not contact all wholesalers Channels therefore reduce cost of contact(debatable)

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Who Belongs to a Marketing Channel? Manufacturers own distribution centres and Carrying and Forwarding Agents (These were very necessary in the pre VAT days)  Intermediaries 

 Distributors, Stockists, Value Added Resellers

and Agents  Wholesalers  Retailers 

End Users

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Intermediaries 

They can be broadly classified into:  Merchants

who buy, take title to and resell the goods – wholesalers, retailers  Agents who search for customers, negotiate on manufacturer’s behalf but do not take title to the goods – brokers, merchant representatives  Facilitators who assist the distribution process but neither negotiate nor take title to the goods – transporters, warehouses, banks, advertising agencies

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Patterns of Distribution Intensive – normally for FMCG and fast moving electricals  Selective – normally for consumer durables  Exclusive – LG, Samsung, Benetton 

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Historical Perspective India 

50s and 60s

 Wholesalers  Regional distributors  Direct sales



70s and 80s  Shift



90s

to dealer network

 Direct



marketing

The recent past

 Internet  Private labels  Direct selling agents

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Physical Possession

Physical Possession

Physical Possession

Ownership

Ownership

Ownership

Financing Risking Ordering Payment

Negotiation Financing Risking Ordering Payment

Promotion Negotiation Financing Risking

CONSUMERS

Negotiation

Promotion

RETAILERS

Promotion

WHOLESALERS

MANUFACTURERS

Marketing Flows in Channels

Ordering Payment 40

Marketing Flows in Channels

Marketing Flow        

Cost represented

Physical possession Storage and delivery costs  Inventory carrying costs Ownership  Personal selling, Advertising, Sales Promotion Promotion, Publicity, PR  Time and legal costs Negotiation  Credit terms, terms and conditions of Financing sales  Price guarantees, warranties, insurance, Risking repairs and after sales service  Order processing costs Ordering  Collections, bad debt costs Payment

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Value Added by Distribution Channels 

Channels are not only the conduits but have to be viewed as adding value through services provided:  Bulk Breaking – reducing large sizes  Spatial Convenience – reducing distance between

producers and consumers  Waiting and Delivery Time  Assortment - providing variety 

Other areas of value addition are:  After Sales Service  Financial support for high value item

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Customer Service Levels and Distribution Objectives 

Customer service levels looks at:  Number of channels  Frequency of visits  Stock levels



Setting distribution objectives:  In terms of time, place and possession utilities  Credit period

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Set of Activities Area wise sales forecast Dispatch of goods and maintenance of inventory levels  Developing market beats for sales and service personnel  Collection of proceeds  Carrying out promotional activities  Relationship building with bigger channel members  

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Distribution Organisation Who does what? How much does he get compensated for it?  Guidelines for selection and appointment of channel partners  Guidelines for financial investments by channel members  

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Policy and Procedures 

Operating manual issued to sales people:  Basic space and finance requirement  Exclusivity  Terms of delivery  Terms of payment  Basic discounts  Other discounts  Promotional support  System for handling disputes  Additional support for rural markets  Coverage of institutional business

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We Often Do Not Reach Our Potential Because We set our limits It is hard to breakaway from our old self

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